02 October 2009

Trading Friday - Sri Lankan Shares Closed at a Record High Today

02nd October 2009, www.lankabusinessonline.com

Sri Lankan shares closed at a record high Friday, as investors expecting the bull run to continue on the short term with periodical profit taking, while upcoming quarterly results will point at the bourses long term direction, brokers said.

The All Share Price Index (ASPI) was up 0.68 percent (20.41 points) to end at 3,018.01 while Milanka index liquid stocks gained 1.25 percent (42.00 points) to close at 3,394.86, according to provisional stock exchange figures.

Turnover was 1.07 billion rupees, with a year-to-date turnover of 89.2 billion rupees, the stock exchange said.

The ASPI has shot up 100.8 percent this year, while the Milanka is up 108.1 percent, a stock exchange statement said.

According to Bloomberg Newswire the Colombo Stock Exchange is the best performing market in Asia and the fourth best performing index in the world, the exchange said.

"Today is a day that goes down in history with the ASPI reaching 3,018 points and a market capitalization of 967 billion rupees reflecting the positive attitude of investors," Thakshila Hulangamuwa, of stock brokering house Asha Phillip Securities said.

"The sustainability of the market will purely depend on the positive outcome of financial results in the forthcoming quarters as the market has adjusted to the post-war euphoria."

Index heavy conglomerate John Keells Holdings (JKH) closed at 154.00 rupees, up 1.00, while Distilleries Company of Sri Lanka closed at 89.25 rupees, up 2.25.

Brokers said 18 million Seylan Merchant Bank non-voting shares changed hands. It closed at 80 cents, up 10 cents.

Commercial Bank of Ceylon closed at 176.25 rupees, up 2.25, while National Development Bank closed at 190.75 rupees, down 1.00.

Sampath Bank closed at 179.50 rupees, up 8.50, while DFCC Bank closed at 153.00 rupees, up 1.00.

Nestles Lanka, a unit of Swiss based food company Nestles closed at 411.50 rupees, up 1.75, while Ceylon Tobacco, Sri Lankan unit of British American Tobacco closed at 185.00 rupees, up 2.50.

Celco Dialog Telekom, the Sri Lankan unit of Telekom Malaysia closed at 7.00 rupees, up 25 cents, while Sri Lanka Telecom closed 45.00 rupees, down 50 cents.

1 comment:

Sri Lanka Equity Analytics said...

Sri Lanka All Share Index reaches record high

Sri Lanka stocks, Asia’s best performers this year, reached a record high as the end of the island’s civil war and inflation at the weakest pace in at least five years stokes an economic recovery.

The Colombo All-Share Index rose 0.7 percent to 3,018.01. The measure of 238 companies reached an all-time closing high of 3,016.42 on Feb. 13, 2007, on the Colombo Stock Exchange. Equity purchases accelerated after the index surpassed 3,000, previously seen as a so-called resistance level, said Acuity Stockbrokers director Narendra Godamunne.

Better Returns

Dialog Telekom Plc, Sri Lanka’s biggest mobile-phone service provider, today gained 3.7 percent to 7 rupees. Aitken Spence Plc, the island’s largest operator of resorts, rose 1.7 percent to 885. John Keells Holdings Plc, which owns tea plantations and hotels, climbed 0.7 percent to 154 rupees.

Sri Lankan stocks may offer better returns as the end of the war frees up government spending for investments in infrastructure and agriculture, investor Jim Rogers said in August.

President Mahinda Rajapaksa is seeking funds to turn the north and east of the island into productive parts of the economy after driving out the LTTE rebels and killing their leader Velupillai Prabhakaran.

The government last month hired HSBC Holdings Plc, JPMorgan Chase & Co., and Royal Bank of Scotland Plc to sell $500 million of bonds overseas, the South Asian island’s first in two years.

The government plans to focus spending in the 2010 budget on rebuilding roads, schools and hospitals in areas formerly controlled by the LTTE, the Ministry of Finance said in July.

The central bank on Sept. 11 lowered the reverse repurchase rate to 10.5 percent from 11 percent. The repurchase rate was lowered to 8 percent from 8.5 percent.

Direction of fixed income securities

In contrast, the domestic interest rates have been on the decline with the 3 month Treasury Bill rate having already fallen by 1,182 bps (from 21.3% to 9.48%) since Jan’ 08 to date. We expect the rates to bottom out and to remain at lower levels for the next 2 to 3 years.

The low cost debt inflow from the IMF, rising foreign fund inflow into the economy and high remittance inflow would wane the reliance (of the Government of Sri Lanka)on domestic borrowings and create downward rate pressure on the money markets due to the excessive liquidity been created in the banking system. With the build up of excessive liquidity within the banking system, the banks would be pushed towards lowering their lending rates, which would revive both corporate and retail, debt backed investments. Given the falling cost of borrowing, the corporate profit growth could bolster, the broad economy would grow faster with consumer, property and construction sectors spearheading the revival, which could drive real economic growth by 4.9% (in 2009E), 8.9% (in 2010E) and 11.3% (in 2011E). Therefore with the positive outlook investors would shift from low yield (low risk) fixed income investments to high yield investments laying the foundation for a market rally.

Inflation eased to 0.7% in September

The Government Statistics Department reported that the point to point inflation for September 2009 has decreased to 0.7% (whilst the 12 month moving average inflation is at 6.6%). We believe the pull back in inflation (i.e from 0.9% in August to 0.7% in September) is due to sluggish consumer demand despite a marginal increase in consumer prices. We believe the inflation would remain at single digit levels during the rest of 2009 due to eased monetary stance by the Central Bank. Further it is expected that the inflation on a year-on-year basis too would be at single digit levels throughout the year 2010.

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